25 Psychological Traps That Lead 'Good' People To Commit Fraud

Former Enron CEO Jeff Skilling (R) was convicted for conspiracy and securities fraud
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Many white collar crimes aren't committed by hardened criminals. It's often normally moral people under financial strain, those under severe pressure from their bosses or shareholders, or people who get away with something minor then try to to test their limits.

So what exactly leads otherwise normal and hardworking people to cross the line? That's the subject of a paper by Dr. Muel Kaptein of the Rotterdam School Of Management.

We've collected some of the key insights and cognitive biases as a guide of what to look out for in a workplace.

Time pressure

In a study, a group of theology students were told to preach the story of the good Samaritan, then walk to another building where they'd be filmed. Along the way, they encountered a man in visible distress.

When given ample time, almost all helped. When they were deliberately let out late, only 63 percent helped. When encouraged to go as fast as possible, 90 percent ignored the man.

Self-serving bias

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Few people believe they're average; most think they're smarter and more ethical than those around them.

That can lead to feelings of injustice. If somebody else gets a promotion, it's not down to their performance and capacity, it must be something else. Those feelings, and overestimation of other's biases can lead to unethical behavior.

Conspicuous consumption

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Extreme wealth, or environments that reflect it can lead to unethical behavior. For employees, seeing excessive bonuses or perks that they don't show leads to feeling of injustice and jealousy which may lead them to unethical behavior.

Research by Kathleen Vohs shows that the mere presence of money makes people more selfish, as they focus on success and individual needs over other factors.

Broken window theory

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Former New York City Mayor Rudy Giuliani popularized the "broken window theory" when he led a sweeping effort to lower crime rates. The idea was to crack down on smaller, petty crimes, and clean up the city to create some semblance of order, and discourage larger crimes.

When people see disorder or disorganization, they assume there is no real authority. In that environment, their threshold to overstepping legal and moral boundaries is lower.

The foot in the door

When a figure in authority asks someone to skirt the rules, they want to seem like a team player.

Giving in modifies self perception. A person may begin to think of themselves as extremely loyal, someone who gets things done. In that frame of mind, they may be willing to do increasingly unethical things.

Problematic punishments

Attaching fines or other economic punishments to immoral behavior can have an undesired effect. Once something is cast in those terms, it loses its moral connotation and becomes an entirely different calculation.

Rather than being about whether something is right or wrong, it becomes an economic calculation about the likelihood of getting caught versus the potential fine.

Lack of sleep and hypoglycemia

The rewards of unethical behavior are something people struggle with on a daily basis. As simplistic as it sounds, people who are hungry or tired have less self control.

Research has found that tired participants asked to complete math tasks significantly over-report correct answers. While being tired or hungry won't make someone embezzle, it leaves them more open to moments of weakness.

Escalating commitment

Big thieves usually start out as small thieves. One way such actions become a slippery slope leading to ever greater misconduct is the feeling that there's no way out.

This has been seen in recent rogue traders like Jerome Kerviel and Kweku Adoboli. They got bonuses for taking big risks, but when those risks became big losses, they took even larger risks to try and make up for them.

Market and shareholder pressure

Former Citigroup CEO and Chairman Charles Prince once said, "As long as the music is playing, you've got to get up and dance."

He was referring to the leveraged buyout market in 2007. Before the collapse, there was intense pressure for managers to join in on the huge and risky profits, despite the evident bubbliness of the market.

The compensation effect

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Sometimes people, having been moral and forthright in their dealings for a long time, feel as if they have banked up some kind of "ethical credit," which they may use to justify immoral behavior in the future.

An experiment from Nina Mazar and Chen-Bo Zhong found that people who have just bought sustainable products tend to lie and steal more afterwards than those who bought standard versions.

Negative consequences of transparency

Transparency usually serves to reduce unethical behavior, as it increases the likelihood of getting caught. Experiments examining the publication of conflicts of interest have found a perverse effect.

The effect comes from something called "moral licensing." If a conflict of interest is publicly disclosed, it can seem less problematic, as if it has been agreed that it's all right. That can lead people to indulge their bias.

The pressure to conform

Nobody likes being a nuisance. In order to fit in with a group, people do things they might not otherwise. That can lead them to ignore abuses for the sake of peace or unity and go along with questionable decisions.